Provinces Release Strategic Plan for the Deployment of SMRs
On March 28, 2022, the governments of Ontario, Saskatchewan, New Brunswick and Alberta (the “Provinces”) agreed to a joint strategic plan (the “Strategic Plan”) that outlines the path forward for small modular reactors (“SMRs”) in the Provinces. As noted in our 2022 Power Perspectives publication, the Strategic Plan represents the third and final deliverable identified by the Provinces in their interprovincial memorandum of understanding on SMR development (the “Inter-Provincial MOU”). The Inter-Provincial MOU was first agreed to by the governments of Ontario, Saskatchewan and New Brunswick in December 2019, with Alberta joining the group in April 2021. Through the Inter-Provincial MOU, the Provinces agreed to collaborate on the advancement of SMRs as a clean energy option to address climate change and regional energy demands, while continuing to support economic growth and innovation.
The Strategic Plan further lays the groundwork for Canada’s leadership in SMR technology and innovation and specifically calls on the federal government to fully commit to nuclear energy and SMRs by providing access to all federal funding programs and incentives designed to accelerate the development of clean energy technologies in Canada. On March 29, 2022, the day after the Strategic Plan was released, the federal government appears to have responded to this call with the release of its 2030 Emissions Reduction Plan (the “Emissions Reduction Plan” or “ERP”), which references SMRs as a technology that could play a role in Canada’s efforts to reach its emissions reduction targets and includes specific funding commitments that could support SMR development and deployment.
Strategic Plan for the Deployment of SMRs
The Strategic Plan follows the release of the Feasibility of SMR Development and Deployment in Canada study (the “SMR Feasibility Study”) in April 2021 by the Provinces of Ontario, New Brunswick and Saskatchewan. The SMR Feasibility Study, which was prepared by Ontario Power Generation, Bruce Power, NB Power, and SaskPower, assessed the viability of SMRs in Canada and concluded that the development of SMRs would support domestic energy needs, curb greenhouse gas emissions, and position Canada as a global leader in the industry.
The Strategic Plan builds on the SMR Feasibility Study by identifying key actions that the Provinces can take to enable a decision on whether to proceed with SMRs. Following a decision to proceed, it outlines further actions to support the deployment of SMRs.
In particular, the Strategic Plan identifies five key priority areas for SMR development and deployment:
- Technology Readiness – Early-mover advantage will be critical to positioning Canada as a world leader in new nuclear innovation and an exporter of global SMR technology and the Provinces hope to further research and development in this area by advancing three distinct streams of SMR development, covering both on-grid and off-grid applications.
- Stream 1: Deployment by OPG and GE-Hitachi of a 300-MW grid-scale SMR Project at the Darlington nuclear site in Ontario by 2028. Subsequent units in Saskatchewan would follow, with the first SMR projected to be in service in 2034.
- Stream 2: Two fourth-generation, advanced SMRs that would be developed in New Brunswick for deployment at the Point Lepreau Nuclear Generating Station, with subsequent potential for the deployment of multiple units at this site, as well as in other regions of Canada and abroad. These two fourth-generation SMRs are being developed jointly by NB Power with ARC Clean Energy and Moltex Energy respectively. ARC Clean Energy is targeting to be fully operational by 2029, and Moltex Energy will have both its spent fuel recovery system and reactor in operation by the early 2030s.
- Stream 3: A new class of micro-SMRs designed primarily to replace the use of diesel in remote communities and mines. A 5-MW gas-cooled demonstration project by Global First Power is under way at the Chalk River site in Ontario, with plans to be in service by 2026.
- Regulatory Framework – Promoting a strong nuclear regulatory framework that focuses on the health and safety of the public and the environment while ensuring reasonable costs and timelines. The Strategic Plan suggests that some regulatory changes and clarity will be necessary to streamline the federal regulatory and licensing process for SMR projects, recognizing that SMRs are of lower risk and feature enhanced safety characteristics compared to traditional large-scale nuclear projects.
- Economic and Financing – Securing federal government commitments on financial and policy support for new SMR technologies (including specific commitments to allocate financial support for the SMR project proposals outlined in the Strategic Plan) that would help meet Canada’s emissions reduction targets and lead to significant benefits across the country, including the potential creation of thousands of jobs and billions of dollars in economic benefits.
- Indigenous and Public Engagement – Developing strong public engagement systems and creating opportunities for participation from Indigenous communities, including through employment, skills development, investments, supplier arrangements, and other means to share the benefits of the projects.
- Nuclear Waste Management – Working with the federal government and nuclear operators on a robust nuclear waste management plan for SMRs.
The Strategic Plan suggests that a decision to proceed with an SMR project proposal should follow a careful cost-benefit analysis that includes consideration of certain factors, including:
- the impact of SMRs on electricity system reliability, transmission system requirements and electricity rates;
- the cost-effectiveness of SMRs as a clean energy technology vis a vis other clean energy sources;
- the impact on GDP and job creation;
- the potential for Indigenous participation;
- the potential for innovation and enhancing research capabilities; and
- the potential for global export.
Following a decision to proceed, the Strategic Plan also recommends employing certain provincial policy tools such as power purchase agreements, electricity rate regulation, or provincial government funding to support cost recovery for SMR deployment while encouraging private investment. The Provinces could also seek to work with the federal government and power utilities on additional tools to support first-of-a-kind SMR development costs and support other regional opportunities such as transmission grid extensions and clean energy grants for fossil fuel phase outs.
SMRs and the Emissions Reduction Plan
Announced on March 29, 2022, the Emissions Reduction Plan includes $9.1 billion in new investments and is designed to provide a sector-by-sector path for Canada to reach its emissions reduction targets of 40% below 2005 emission levels by 2030 and net-zero emissions by 2050.
Specific initiatives outlined in the Emissions Reduction Plan that could support the priorities set forth in the Strategic Plan include:
- Powering the Economy with Renewable Electricity – Including by electrifying more activities, increasing the supply of electricity, and ensuring that all electricity generation is net-zero emissions. The federal government acknowledged that continued and enhanced support for the deployment of commercially ready renewable energy technologies such as SMRs will be required to achieve this goal, and committed $600 million of funding to the Smart Renewables and Electrification Pathways Program to support renewable electricity and grid modernization projects and $250 million to support predevelopment work for large clean electricity projects in collaboration with provinces. The federal government will also work with provinces and utilities to establish a Pan-Canadian Grid Council to promote clean electricity infrastructure investments.
- Making it Easier for Canadians to Switch to Electric Vehicles – Including by imposing a sales mandate to ensure that at least 20% of new light-duty vehicle sales will be zero-emission vehicles by 2026, at least 60% by 2030 and 100% by 2035. To do that, Canada will need to increase the supply of non-emitting sources of electricity such as solar, wind, hydro and nuclear.
- Driving Down Carbon Pollution from the Oil and Gas Sector – Both through diversifying Canada’s energy mix as well as by investing in and providing lower carbon oil and gas to the world. The ERP further notes that the federal government will work to implement a cap on oil and gas sector emissions that is designed to lower emissions at a pace and scale needed to achieve net-zero by 2050.
- Empowering Communities to Take Climate Action – Including by expanding the Low Carbon Economy Fund through a $2.2 billion renewal. The renewed Low Carbon Economy Fund will also support climate action by Indigenous Peoples with a new $180 million Indigenous Leadership Fund to support clean energy and energy efficiency projects led by First Nations, Inuit, and Métis communities and organizations. In addition, the federal government will support regional growth opportunities and energy systems transformation through a $25 million investment in Regional Strategic Initiatives.
- Maintaining Canada’s Approach for Pricing Pollution – To enhance long-term certainty, the ERP commits the federal government to exploring measures that help guarantee the price of pollution, including investment approaches, like carbon contracts for differences, which would enshrine future price levels in contracts between the Government and low-carbon project investors, thereby de-risking private sector low-carbon investments.
The Emissions Reduction Plan identifies nuclear energy, and SMRs in particular, as playing a role in Canada’s emissions reduction targets and the transition to clean, non-emitting energy. The ERP notes that investments in existing, commercially available renewable energy and grid interties, as well as developing new sources of electricity, such as SMRs, will be key to both replacing the current emitting sources of electricity generation and to meeting increased demand. To this end, the federal government highlighted SMRs as one of several emerging technologies that will benefit from over $850 million in development and deployment supports.
The ERP’s recognition of SMRs and the actions that the Provinces have taken to advance SMR development and deployment signals an acceptance by the federal government that the path to net zero may differ across Canada, and that every source of non-emitting generation will need to be explored and deployed to meet the huge transformational changes required to achieve net zero grids by 2035. The ERP expressly mentions the Inter-Provincial MOU and the Provinces’ SMR initiatives as key actions taken in furtherance of the ERP’s objectives.
Looking forward, the federal government committed to further implementing its SMR Action Plan, including by establishing an SMR Leadership Table to advance Canada’s SMR future, ensure participants benefit from expert advice and guidance, and explore opportunities to expand the development and deployment of SMRs in Canada and abroad.
While the Strategic Plan is the Inter-Provincial MOU’s final deliverable, the Provinces state that it is just the beginning of their efforts to advance SMR innovation in Canada. For more information on SMRs in Canada, please see our prior publication: Power Perspectives 2022 - SMRs: Renewed Support for Nuclear Power in Canada.